Dow Chemical cuts jobs, aims to close a Texas City unit

Dow Chemical begins layoffs, says it’s closing a Texas City unit

BRETT CLANTON, Copyright 2009 Houston Chronicle

Published 6:30 am, Friday, January 16, 2009

Dow Chemical Co. has begun laying off workers in Texas and in other regions and will close a third manufacturing plant in the state as part of a corporate restructuring announced last month. Layoffs started this week at all of the Midland, Mich.-based chemical giant’s operations in Texas, where the company employs 6,000 people at manufacturing sites in La Porte, Freeport, Texas City, Clear Lake, Seadrift and an administrative office in Houston, Dow spokeswoman Tracie Copeland said. The cuts could continue through the end of the quarter, she said, declining to say how many workers will be terminated. Dow, the nation’s largest chemical maker, also will shut down a production unit at its manufacturing complex in Texas City. The unit, which makes solution vinyl resins, also called SVR, will close later this year, and the company hopes to reassign its 58 workers, Copeland said. The Texas City unit joins two plants at the Freeport complex — a styrene unit at Plant B and a chlor-alkali unit at Oyster Creek — also being shuttered as part of the restructuring. In December, Dow said it would cut 11 percent of its global work force, or about 5,000 employees, and a third of its 6,000 contractors, as well as slash output at 180 plants and close another 20 plants worldwide. One manufacturing site, like the Freeport complex, can contain dozens of plants. The company is still determining whether additional plants in Texas could be closed under the plan, Copeland said. Dow expects to save $700 million annually in operating costs once the changes are fully implemented in 2010. Industry scaling back Dow, BASF, DuPont and other chemical makers are cutting production and jobs amid a global recession that has sharply weakened demand for cars, construction materials and consumer goods that contain chemical-derived products. Texas, the nation’s largest chemical producing state, could be hit hard by the cutbacks. In addition, Dow is under pressure to complete its $18.6 billion acquisition of Philadelphia-based Rohm & Haas Co., a speciality chemical maker with operations in the Houston area. Last month, the Kuwaiti government backed out of a $17 billion plan to buy half of Dow’s basic plastics unit and form a joint venture called K-Dow, proceeds from which Dow planned to use to fund the Rohm & Haas acquisition. Now, Dow may be forced to accept “bargain basement prices” for its plastics unit to execute the plan, CreditSights, an investment research firm in New York, said in a report last week. Freeport cuts Prior to the restructuring announcement, Dow said it would temporarily cut production in Freeport—its biggest manufacturing site—to roughly 40 percent of capacity, and send home most of its 4,000 contract workers. Those cuts, initially set to expire on Jan. 5, were extended until the end of the month amid continued poor business conditions. But company officials have offered few details about how the corporate restructuring plan will further affect the Freeport complex and other Texas sites. “Supervisors are continuing to work through this process and determine their needs for employees that will fit for the future,” Copeland said. “We’re moving forward.”’ In Freeport, Dow has offered 50 voluntary buyouts to its 950 unionized plant operators. Charlie Singletary, business manager of the International Union of Operating Engineers, Local 564, which represents 1,200 Dow workers in Freeport and Texas City, said Dow has extended a deadline for accepting the buyouts after failing to get the targeted number. “We’re hoping they can get at least 50 people so we can avoid layoffs,” he said. Dow officials would not say how many of the Freeport site’s 4,500 total employees will be cut as part of the restructuring. Less BASF activity Separately, Germany’s BASF, the world’s largest chemical maker, continues to keep a plant closed at its Freeport site and run a Port Arthur plant at reduced levels. In November, the company said it was temporarily closing 80 plants worldwide due to slumping demand and cutting production at 100 more in moves affecting some 20,000 workers. “BASF has not made any further announcements or decisions regarding these locations or associated personnel as we continue to closely monitor market conditions,” company spokesman Daniel Pepitone said. brett.clanton@chron.com